Initial jobless claims fall, but continuing claims rise

It was a good news/bad news week on the employment front. Initial jobless claims fell 38,000 to 555,000, the U.S. Labor Department announced Thursday, however, continuing claims rose slightly to 6.3 million.

Economists surveyed by Bloomberg News had expected jobless claims to fall to 575,000. Meanwhile, the four-week moving average for initial jobless claims decreased 4,750 to 555,250.

Economists view the four-week average as a better indicator of unemployment conditions, as it smooths out anomalies for strikes, holidays, or other idiosyncratic events.

A continuing claims up-tick

The 69,000 jump in continuing claims to 6.3 million was a slight disappointment: Continuing claims have been trending lower, but any jump provides fuel for U.S. stock market bears, who argue that a double-dip recession is possible, given weak demand conditions.

Economists also monitor the continuing claims stat because it provides a snapshot of how long it's going to take the typical person to find comparable employment once he/she has sustained a job loss. In general, continuing claims above 3 million reflect a slack labor market, and point to extended, six to nine month (or longer) job searches.

Moreover, the nation's deepest recession in more than 25 years has created a troubling job market, according to the Economic Policy Institute, a liberal think-tank based in Washington, D.C. As of June, there were nearly six qualified employees for every job opening in the United States, the EPI said, and more than 25 million Americans are now lacking the work they want.

Economic Analysis: Jobless claims are trending lower, but the level, 555,000, is still consistent with weak employment conditions. Further, we're going to ignore the continuing claims up-tick and focus on the bigger picture: Housing market stabilization, consumer spending, re-liquefied credit markets, and fiscal stimulus all suggest that the nation's longest recession since the 1930s is bottoming. That also likely means more employers will taper lay-offs.
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